When Congress passed the 21st Century Cures Act in December 2016, it created a new health plan for small businesses—the Qualified Small Employer Health Reimbursement Arrangement (QSEHRA), or Small Business HRA.

Under a QSEHRA, businesses with fewer than 50 full-time employees can reimburse their staff for individual insurance premiums and qualified out-of-pocket medical expenses. The business sets a monthly allowance for employees, verifies and approves Employee expenses, and then reimburses them from that allowance.

QSEHRAs are administered on a tax-free basis for small businesses. Employees are also spared from income tax—provided they’re covered by an insurance policy with Minimum Essential Coverage (MEC).  

Hundreds of small businesses across the country have already found relief through the QSEHRA, both from the cost and administration time associated with group health insurance and from the damage of not offering health benefits at all.

However, what businesses may not realize is that even employees without MEC can benefit from the QSEHRA.